Driven by big ambitions

PUBLISHED : Saturday, 16 February, 2008, 12:00am
UPDATED : Saturday, 16 February, 2008, 12:00am

Hong Kong can capitalise on its expertise, location and demand from the mainland to establish a large-scale car manufacturing business

Famed for its high human capital, land costs and impeccable public transport, Hong Kong is not the first place that comes to mind for an automotive industry.

According to Chung Sin-ling, the general manager of EuAuto Technology, while as yet there is almost no local automotive industry, Hong Kong does boast a second- and third-tier automotive component industry.

That said, her company is something of a groundbreaker.

In co-operation with Milan Technical University and Polytechnic University (PolyU), not to mention the world famous Italian automobile designer Giorgetto Giugiaro and Hong Kong investment unit InnoVech, EuAuto has created a micro-car for the niche European market, known as MyCar.

'MyCar is an automotive pioneer, producing the complete vehicle from the wheels up,' Ms Chung said.

'We saw the potential for us to implement this project in Hong Kong, using China as the support factory, and a local professional team.'

While the automotive industry is small in Hong Kong, on the mainland it is a different story.

Ms Chung noted that the industry was growing rapidly over the border, with increasing emphasis on quality and export opportunities.

The SAR does, however, offer automotive industry players various advantages.

'Hong Kong has a strong car culture,' said Lawrence Ang Siu-lun, the executive director of Geely Automobile Holdings, which is co-operating with Manganese Bronze Holdings in Britain to develop a new generation of taxis for the British market, known as the TX4.

'It's not a very strong car-engineering base, but in the car-design area it's pretty sophisticated, [generating] top designers for Porsche and SAAB,' Mr Ang said.

He believes that Hong Kong should capitalise on its outstanding home-grown design skills, especially with the increasing emphasis on design within the industry worldwide, and entice domestic talent.

'We are a hub of the international community, and although Hong Kong is a small place, you can see all types of vehicles from different parts of the world here,' Ms Chung said.

'This is a rich, innovative and dynamic city, so people use it as a focused market segment in which to put products and do competitive analysis and market awareness.'

According to Mr Ang, one of Hong Kong's biggest advantages comes courtesy of the Closer Economic Partnership Arrangement (Cepa).

He noted that this was the only location in the world where cars could be exported to the mainland minus import tariffs.

'We are planning large-scale manufacturing as Hong Kong, with the exception of its high costs, is a good location because of this tax privilege,' Mr Ang said.

'China consumers can see this [Hong Kong-designed model] as an imported car but interestingly, because of Cepa, [we avoid] the really high import tariffs.'

On the other hand, the Hong Kong market does have its limits, according to Ms Chung, thanks to its roughly 7-million-strong population and limited roads.

The high cost of land and labour to make parts and components is another significant drawback.

The chronic shortage of technical staff is yet another minus, and trained people would have to be recruited from outside.

Nonetheless, this situation can improve, according to Tony Lee, chief executive of the Hong Kong Automotive Parts and Accessory Systems (Apas) R&D Centre, a research and development facility set up under the R&D Centre programme of the Innovation and Technology Commission and hosted by the Hong Kong Productivity Council.

'There is a lot of need for automotive parts in China; that need must be satisfied. It's an opportunity for companies, who are not in the automotive industry, to [join] it,' Mr Lee said.

As a result, he believes that employment opportunities are likely to increase.

Although the industry does not employ large numbers, openings are particularly likely on the technical and management side.

'Hong Kong companies tend to attract management and technical people locally, while factory workers are still probably [required from] China or other low-cost areas,' Mr Lee said.

With that in mind, one of Apas' tasks is to nurture technical staff and fresh graduates to satisfy future demand, and it has already held a number of recruitment rounds.

'We intend to recruit 10 or 20 more engineers. It's not a large number but in Hong Kong it's very difficult to find [this many] engineers with a good automotive background,' he said.

In Ms Chung's opinion, such support from both government and academic institutes is vital if Hong Kong is to sustain an automotive industry.

This can already be found in PolyU's master's degree in automotive engineering, or, for example, government backing for the Apas R&D centre.

However, Ms Chung noted that the Hong Kong government should also focus on land, as the automotive industry required four times more space than that offered by science parks or technology offices.

'Land is a major problem and a high-cost element in Hong Kong, and making a vehicle is not like making a toy car,' Ms Chung said.

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Hybrid vehicle a vehicle with more than one power source, such as a small internal combustion engine and an electric motor

Alternative fuel the choice of any fuel other than the traditional selections such as gasoline (petrol) and diesel

Systems integration a discipline that combines processes and procedures from systems

Robust design otherwise known as the Taguchi Method which greatly improves engineering productivity